We’ve grown faster than our systems. Is it time for strategic finance support?

Growth is usually a good thing. You’re winning more work, taking on bigger projects, growing the team and hopefully seeing the business move in the direction you wanted it to. But growth can also start to show up the gaps in the systems and processes that have supported the business up to that point, because what worked when the business was smaller doesn’t always work once there are more people, more projects and more decisions to make.

That doesn’t mean anything has gone wrong. In fact, businesses often start looking for more strategic finance support because things are going well. The business has grown, it’s become more complex and the way the finances are managed simply hasn’t kept pace with everything else.

You’re busy, but you don’t always feel in control

One of the first signs that a business has outgrown its current finance setup is that everyone is really busy, but the owners still don’t feel as though they’ve got a clear view of what’s going on. There may be plenty of work coming in and the bank balance may look healthy, but it can still be difficult to answer some fairly basic questions with confidence.

You may not know whether all of your projects are profitable, which clients or types of work are giving you the best return, whether the team is being used effectively or whether you can comfortably afford to recruit. You may also find it difficult to see what the cash position is likely to look like in three or six months, or whether the business is actually performing as well as it feels.

When the answers aren’t readily available, decisions are often based on experience, instinct or whatever information happens to be available at the time. Those things still matter, and nobody knows the business better than the people running it, but as the business grows, they’re usually not enough on their own. You need the financial information to grow with the business so that the decisions you’re making are supported by a clearer picture of what’s actually happening.

It’s often about confidence rather than survival

One thing we’ve found is that businesses don’t usually come to us because they’re in trouble. More often, they’re growing and have reached the point where they want better information to help them manage that growth properly.

The conversation is rarely about survival. It’s more likely to be about whether the business can afford to recruit, whether it’s the right time to invest in new systems, whether pricing needs to change or whether taking on a larger project will put too much pressure on cash or resources. The owners will usually already have a view on what they want to do, but they want stronger information behind the decision so they can move forward with more confidence.

That’s where strategic finance support can make a real difference. It isn’t about replacing your judgement or experience, because you’ve built the business and you understand it better than anyone else. It’s about giving you better information so that you can make those decisions with a clearer understanding of the likely impact.

Compliance is important, but it only tells you part of the story

Most business owners are familiar with the compliance side of accounting. They know the annual accounts need to be prepared, tax returns need to be submitted, and deadlines need to be met. All of that is important, but it’s mainly focused on what’s already happened.

Strategic finance support looks at the information in a different way. Rather than simply telling you whether the business made a profit last year, it helps you understand which projects were profitable, where margins may have been lost, how the team is being used and what the future cash position might look like.

It moves the conversation on from whether the numbers are correct to what those numbers are actually telling you and how they can help you make decisions about what comes next.

Better visibility helps you make better decisions

Visibility isn’t just about having more reports. There’s no value in producing pages of information if nobody understands it or knows what to do with it. It’s about having the right information, at the right level of detail, and being able to talk through what it means for the business.

At a high level, that may mean understanding whether revenue, profit and cash are moving in the right direction. At a more detailed level, it could mean looking at project profitability, client profitability, staff utilisation or how different services are performing.

That level of detail can be particularly useful in consultancy businesses. A project may look successful because the fee was high, but once you look at the time spent on it, the margin may be much lower than expected. Another project may have had a smaller fee but actually produced a better return because it was scoped and managed more effectively.

Without that visibility, it’s easy to carry on making assumptions. You may believe a certain type of work is profitable because it brings in a lot of revenue, when the time spent delivering it tells a different story. Once you can see that clearly, you’re in a much better position to make decisions around pricing, recruitment, resourcing and the type of work you want the business to take on in the future.

Growth makes the gaps harder to ignore

When the business is smaller, the owner can usually keep a lot of the information in their head. You know which projects are going well, which clients are slow to pay and whether the team has capacity because you’re close to everything that’s happening.

As the business grows, that becomes much harder. There are more people, more projects, more costs and more decisions, and the information may be spread across different systems or held by different members of the team. At the same time, the owner is often pulled further away from the detail but is still responsible for making the important decisions.

That’s usually when the gaps start to show. Management accounts may arrive too late to be useful, cash flow may be monitored by looking at the bank balance rather than using a forecast and project performance may only become clear after the work has finished. Recruitment decisions may be delayed because nobody feels completely sure what the business can afford.

None of that means the business is failing. It often just means the business has reached the point where the informal processes that worked before aren’t enough anymore.

Strategic finance support gives you time to step back

When you’re involved in the day-to-day running of the business, it can be difficult to step back and look at the bigger picture. There’s always something more urgent to deal with, whether that’s a client issue, a project deadline, a recruitment decision or something happening within the team.

Financial questions often get dealt with when they become pressing rather than as part of a regular planning process. Strategic finance support helps create the structure and accountability to look at the business more objectively, rather than only focusing on whatever needs attention that week.

That might involve reviewing performance each month, comparing actual results against the budget, updating the cash flow forecast or talking through decisions that are likely to affect the business over the next few months. It isn’t just about producing the information either. Sometimes the most valuable part is having someone to discuss it with, particularly someone who understands both the numbers and the practical realities of running a consultancy business.

The support can grow with the business

There isn’t one point where every business suddenly needs a full outsourced finance department. The right level of support depends on where the business is now, what’s already in place and what the owners are trying to achieve.

For one business, the first step may be improving the bookkeeping and making sure the information in the accounting system is accurate. For another, the bookkeeping may already be working well, and the need may be around management accounts, cash flow forecasting and regular strategic support.

The support can grow over time and it doesn’t all have to be introduced at once. What matters is recognising when the current way of managing the finances is no longer giving you the information or confidence you need.

How do you know when it’s time?

There isn’t a perfect checklist, because every business is different, but there are some common signs. You may be relying heavily on the bank balance to understand how the business is doing, or you may be receiving financial information but still not feel able to make decisions from it. You may not know which projects or clients are most profitable, or you may be considering recruitment or investment but don’t feel completely confident about the timing.

You may simply feel that the business is doing well, but the systems and reporting haven’t kept up with the growth.

That’s often the point where it’s worth having a conversation about strategic finance support. It doesn’t mean you need to commit to a full outsourced finance department from day one. It may simply mean looking at what better financial visibility could look like for your business and deciding which areas would make the biggest difference first.

The aim isn’t to add more reports for the sake of it. It’s to give you better information, better support and more confidence in the decisions you’re making as the business grows.